Nigeria's tech scene is thriving with startups tackling challenges in logistics, finance, healthcare, and more. However, this rapid growth has a downside, as a new report has revealed that Nigerian startups borrowed over $415 million out of the $2.1 billion funding accessed by African startups over the past decade.
This figure comes from a recent report by Briter Bridges, a research and market intelligence firm focusing on emerging economies. The report, “Debt Financing in Africa’s Innovative Ecosystem”, reveals that African startups as a whole borrowed a total of $2.1 billion between 2014 and 2023, with Nigeria's $415 million ranking second behind Kenya's $800 million.
Over 75% of the total loan investment received by African entrepreneurs came from the main four countries — Nigeria, Kenya, Egypt, and South Africa. Cleantech received about half of the stated loan capital between 2014 and H1 2023. Pay-as-you-go items and solar house kits received the most of the money. Almost 25% of debt capital in fintech has gone toward buy-now-pay-later and asset finance.
Some notable debt deals include the $200 million raised by the Kenyan startup Mkopa, $130 million by another Kenyan startup, Sunking, and $50 million by the Nigerian startup Lumos, ranking among the top funding transactions.
Despite the debt concerns, the future of Nigerian startups remains bright. The country boasts a young, tech-savvy population, with a thriving entrepreneurial spirit. With careful planning and responsible debt management, Nigerian startups can leverage this debt to fuel their continued growth and become a driving force in Africa's digital transformation.